The Cost Benefit Analysis of Climate Change Legislation: Future Generations Will Thank You

The latest talking point of climate change skeptics is the desire for a detailed cost benefit analysis. Sen. Marco Rubio recently claimed, "There has to be a cost-benefit analysis... Is there anything government can do about it that will actually make a difference?" During a Meet the Press debate with Bill Nye (The Science Guy), Rep. Marsha Blackburn stated that, "one of the things that we have to remember is cost/benefit analysis has to take place." At the heart of this political debate is the viewpoint that new environmental legislation would lead to "the final nail in the coffin of the American middle class." On the other end of the spectrum, 97 percent of climate scientists believe climate change "is happening and is human caused." In addition, scientific organizations like the IPCC and the U.S. National Climate Assessment Committee have issued firm warnings about the economic dangers of unmitigated climate change. These warnings are often difficult to quantify; especially when the unimaginable costs of extreme weather become a way of life. World-renowned scientist Michiu Kaku has stated that, "100-year forest fires, 100-year droughts, 100-year floods, 100-year hurricanes" could become the norm as a result of increased greenhouse emissions and a changing climate due to human activity. Therefore, a true cost-benefit analysis must entail not only the short term economic fears of conservatives, but also the impact on future generations of Americans.

According to the Environmental Protection Agency, the transportation, industry and electricity sectors in the U.S. totaled 80 percent of greenhouse emissions. Coal power accounted for 44 percent of electricity in 2012 and 81 percent of coal production in the U.S. is used by power plants. As for the oil and gas sectors, they provide the foundation of the U.S. economy. Congressional testimony of Jack N. Gerard, President of the American Petroleum Institute, illustrates the massive size of the oil and gas industry:

Currently, the entire natural gas and oil industry supports 9.2 million U.S. jobs; accounts for 7.7 percent of the U.S. economy and delivers $86 million per day in revenue to our government. In addition to job creation, unconventional natural gas and oil paid $62 billion in local, state and federal government taxes in 2011. By 2020, this number is expected to grow to $111 billion. On a cumulative basis, unconventional natural gas and oil activity is projected to generate more than $2.5 trillion in tax revenues between 2012 and 2035.

In addition, the oil and gas industry adds $1.1 trillion to the national economy and the U.S just recently became a net exporter of petroleum. Along with this massive size comes immense influence. In 2011, the oil and gas industry spent $150 million on lobbying efforts and utilized almost 800 lobbyists.

The size and influence of oil and gas companies might eventually pale in comparison to droughts, famines and catastrophic events like Hurricane Sandy on an unprecedented scale. While these catastrophes might not happen tomorrow, climate scientists believe we're on pace for these events at some point in the future. Lord Nicholas Stern, author of the Stern Review on the Economics of Climate Change for the British government, writes in his renowned report that climate change legislation is an economic and moral necessity:

The scientific evidence is now overwhelming: Climate change is a serious global threat, and it demands an urgent global response... the benefits of strong and early action far outweigh the economic costs of not acting. Climate change will affect the basic elements of life for people around the world -- access to water, food production, health and the environment. Hundreds of millions of people could suffer hunger, water shortages and coastal flooding as the world warms. Using the results from formal economic models, the Review estimates that if we don't act, the overall costs and risks of climate change will be equivalent to losing at least 5 percent of global GDP each year, now and forever. If a wider range of risks and impacts is taken into account, the estimates of damage could rise to 20 percent of GDP or more.

So, let's assume that the Stern Report estimate of "20 percent of global GDP per year in damage" is the high end projection of climate change disaster. On the lower end, the financial cost of Hurricane Sandy in 2012 was $65 billion dollars and the recent Midwest/Plains drought is estimated at $35 billion. If these extreme weather-induced events become a "way of life" as stated by Michio Kaku, Lord Stern, and others, then the financial risks of climate change will far exceed the trillions of dollars produced by the U.S. energy sector.

When a thorough cost-benefit analysis is done with respect to future generations, enacting climate change legislation today is not only a moral imperative, but also makes perfect economic sense. The trillions of dollars produced by the oil and gas industry can't possibly overshadow even the mildest projections and warnings of scientists. Therefore, the fate of our planet doesn't only rest on next year's unemployment numbers; it related directly to the world we leave for future generations. Our great-grandchildren and their children will thank us for passing laws today that protect their way of life, their economies, and their planet.